There should be a national overhaul of the policing of protests that reasserts the state's obligation to allow lawful demonstrations, a scathing report into how the Metropolitan police handled the G20 protests recommended today.

Advocating major reforms in the way such marches are handled, Denis O'Connor, the chief inspector of constabulary, said national tactics for policing protest were "inadequate" and belonged to a "different era".

"What the review [of policing protest] identifies is that the world is changing and the police need to think about changing their approach to protest," O'Connor said.

The impact of "kettling", or containment policies that trap thousands of people inside police cordons for several hours, should be "moderated" by providing officers on the ground with greater discretion to allow peaceful protesters and bystanders more freedom of movement.

Commanders appeared not to properly understand basic human rights laws or the legal requirements surrounding the use of kettling, the report said. However, O'Connor said this was the case for only some senior officers, and refused to identify those at fault.

The Metropolitan police immediately promised its own review of protest tactics and training, and conceded that not acting on recommendations would result in a "loss of confidence" in the force.

The 60-page report, Adapting to Protest (pdf), was commissioned after condemnation of the Metropolitan police's handling of the London demonstrations in April, which ended in the death of the newspaper vendor Ian Tomlinson.

It said police were currently failing in their human rights obligations, and described public order policing guidance issued by the Association of Chief Police Officers (Acpo) – adopted by all forces across England and Wales – as "insufficient".

The national policy should be overhauled, it said, to "demonstrate explicit consideration of the facilitation of peaceful protest".

O'Connor said the G20 demonstrations were a watershed moment that highlighted the failings in how protests are policed: "On that day during the G20 all of these issues crystallised together. For better or worse, we have taken a view today that it's time to change and move on."

His report made a number of recommendations, including that officers should wear identification badges at all times and that police communication – with protesters, the media and members of the public – should urgently be improved.

The report said that, contrary to claims by senior Met officers before the demonstrations, there was "no specific intelligence which suggested any planned intention to engage in co-ordinated and organised public disorder".

Despite that, senior commanders gave "no consideration" to the idea that the protests might be peaceful and planned how to deal "robustly" with unlawful activity.

Scotland Yard described the report as a "sound framework", with Assistant Commissioner Chris Allison, in charge of central operations, saying it would look into ways to improve the use of containment and other tactics.

Sir Hugh Orde, the incoming Acpo president, told its annual conference in Manchester today that the organisation would examine any recommendations relevant to it.

From his experience policing marches in Northern Ireland, Orde said, he believed the G20 problems might not have arisen if human rights had been put at the centre of operational decisions.

He also warned police forces to be aware of how their actions appeared in an age of worldwide media and instant communication: "Police actions will travel around the world at a velocity we have never seen before, and the judgments that go with it."

Senior Met officers had lobbied hard to retain kettling, arguing that it prevents widescale disruption spreading throughout a city.

The technique was used extensively at the G20 protests, and resulted in repeated clashes with demonstrators who wanted to leave cordoned areas. Today's report noted that a significant number of complaints about the G20 protests concerned the way kettling was apparently indiscriminate, containing people in a small area for an unknown period of time, without sufficient access to food, water and toilets.

In the future, protesters should know about containment plans in advance and officers should be given more scope to allow distressed or vulnerable people to pass through police cordons, it said.

O'Connor said his recommendations should be implemented urgently, expressing hope that some measures would be in place in time for protests planned for the end of the summer.

He said: "If these recommendations are not adopted I would expect there will be more disruption in our lives, potentially. There will be very problematic incidents and police will be challenged in the courts. The public will become progressively aware of it, and consent will be withdrawn. It won't necessarily be a cliff face, but another sad erosion of the faith in British policing."